Carlsbad may lease old tank to company that sells water for fracking

CARLSBAD >> The city of Carlsbad may lease a water tank to Gregory Rockhouse Ranch, a company that sells water to the oil and gas industry.

The proposed lease agreement goes before the city council Tuesday.

The 10,000 barrel water tank is old and in poor shape, according to city attorney Eileen Riordan. Gregory Rockhouse Ranch sells water to oil and gas industries for fracking purposes, a practice that has been somewhat controversial during periods of drought.

A barrel of water equals 31.5 gallons, meaning the tank could hold up to 315,000 gallons of water. The city does not use the equipment, and extensive repairs are needed before the city can use it again, according to an agenda report. Gregory Rockhouse Ranch, located just north of Carlsbad, would use the tank to store its own water, Riordan said.

If approved, the lease would require the company to make its own repairs and maintenance upkeep. The city has the option to renew the lease after the five years are up. If the city chooses not to renew after that time, the tank can be used again as part of the municipal water system.

The city would charge the company $500 each year of the 5-year lease. Gregory Rockhouse Ranch must also pay any fees the State Land Office would require for the tank's use.

The company can cancel the lease at anytime if it's approved, but the company cannot receive a refund.

The tank, which is in the Double Eagle system, is northeast of Carlsbad, Riordan said.